Correlation Between Ablerex Electronics and U Media

Can any of the company-specific risk be diversified away by investing in both Ablerex Electronics and U Media at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ablerex Electronics and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ablerex Electronics Co and U Media Communications, you can compare the effects of market volatilities on Ablerex Electronics and U Media and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ablerex Electronics with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ablerex Electronics and U Media.

Diversification Opportunities for Ablerex Electronics and U Media

-0.78

Correlation Coefficient

Ablerex Electronics  U Media

Pay attention - limited upside

The 3 months correlation between Ablerex and 6470 is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ablerex Electronics Co and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications and Ablerex Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ablerex Electronics Co are associated (or correlated) with U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Ablerex Electronics i.e., Ablerex Electronics and U Media go up and down completely randomly.

Pair Corralation between Ablerex Electronics and U Media

Assuming the 90 days trading horizon Ablerex Electronics Co is expected to generate 1.39 times more return on investment than U Media. However, Ablerex Electronics is 1.39 times more volatile than U Media Communications. It trades about 0.07 of its potential returns per unit of risk. U Media Communications is currently generating about -0.06 per unit of risk. If you would invest  4,250  in Ablerex Electronics Co on February 19, 2024 and sell it today you would earn a total of  360.00  from holding Ablerex Electronics Co or generate 8.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ablerex Electronics Co  vs.  U Media Communications

Ablerex Electronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ablerex Electronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ablerex Electronics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

U Media Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days U Media Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, U Media is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ablerex Electronics and U Media

The main advantage of trading using opposite Ablerex Electronics and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ablerex Electronics position performs unexpectedly, U Media can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in U Media will offset losses from the drop in U Media's long position.

The idea behind Ablerex Electronics Co and U Media Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.